Agenda item

Report No: OAS/FH/18/004

[Councillor Brian Harvey declared a non-pecuniary interest as Forest Heath’s representative on the Barley Homes Shareholders Advisory Group.  For this item only, Councillor Harvey was representing the Shareholder Advisory Group, and was not acting as a member of the Overview and Scrutiny Committee]

Prior to the report being presented Councillor Sara Mildmay-White, Lead Cabinet Member for Housing and a St Edmundsbury Borough Council representative on the Barley Homes Shareholder Advisory Group (SAG) introduced two of the Directors from Barley Homes, Davina Howes and Simon Phelan for the West Suffolk Council’s, Councillor Brian Harvey, Forest Heath’s representative on SAG and Aidan Dunn, Assistant Director (Strategic Finance) and Head of Procurement at Suffolk County Council (SCC), who supported SCC in operating Barley Homes.   

Councillor Sara Mildmay-White then presented Report No: OAS/FH/18/004, which provided the opportunity for Members to note the Barley Homes’ Annual Report 2018 and the SAG’s view and recommendations, and to provide any additional comments to inform the preparation of Barley Homes next Business Plan, which would be brought to the Overview and Scrutiny Committee in the summer.

Attached at Appendix A to the report was the Annual Report of Barley Homes (Group) Limited, the company established jointly with Forest Heath District Council (FHDC), St Edmundsbury Borough Council (SEBC) and Suffolk County Council (SCC) to build open market housing for sale, housing for private rent and affordable housing.  The Annual Report (Appendix A) presented the position from a Barley Homes perspective, and the covering report provided the perspective from both FHDC and SEBC’s viewpoint, as joint owners (shareholders) of Barley Homes. 

The covering report also included information on the current progress made against the agreed Barley Homes Business Plan; key challenges and achievements; and a number of recommendations on the way forward, which the Overview and Scrutiny were asked to consider, such as:

·      SAG welcomed any feedback from the Scrutiny Committee on how to improve communications so as to keep all members better informed moving forward.

The Committee expressed concerns regarding the deliverability of the Barley Homes five-year business plan, given one of the four initial development sites had been removed from the business plan, (Wamil Court, Mildenhall), because Suffolk County Council (SCC), a shareholder in Barley Homes took a decision to sell the site on the open market, securing a higher price.  Although the property had been offered to Barley Homes, the offer they were able to make based on the assessed future development was not acceptable to SCC.

Aidan Dunn, Assistant Director (Strategic Finance) and Head of Procurement, explained in detail the history behind Wamil Court, Mildenhall, which went back to the original business plan and the Care UK’s contract for the renewal of the care home, and the need for SCC to maximise the cash receipt for the site when Care UK returned it back to SCC in 2014.  Barley Homes was asked to provide their best market value price for the site, however SCC found a buyer who were prepared to pay three times more than what Barley Homes could offer. 

Following concerns being raised about this sale by the West Suffolk partners, SCC had taken stock of the situation and was now looking at what it wanted as a partner of Barley Homes and stated that SCC was now much more open minded to the bigger picture and not just focused on maximising profits and land receipt sales by being more flexible in how it interpreted market value and pushing for policy compliance. 

All partners were now looking at the original assumption in the original business plan when Barley Homes was established, as these were considered to be too restrictive, and it had become apparent that further work was required with Barley Homes to establish new assumptions and greater flexibilities. SCC wanted houses to be built on the two sites it owned as set out in the Business Plan and it would offer the sites to Barley Homes in the first instance.  However, if the sites were not viable for Barley Homes, then SCC would consider selling those sites to another buyer.

The Assistant Director (Resources and Performance) explained that the market valuation was a subjective issue, depending on the intentions of the purchaser. 

The Committee questioned what needed to be done next to make sure that Barley Homes was a success.  In response, member were informed that Barley Homes was currently working hard to progress the three remaining sites set out in the current business plan to ensure that they worked and delivered against the timeline set out in Appendix A. 

Officers reiterated that all council leaders were fully committed and wanted Barley Homes to be a success.  Conditions in the housing market had changed since the original business plan was prepared, and given the desires to maintain schemes that were policy compliant, a revised business plan would need to be brought forward that still achieved a profitable outcome for the business.

In response to a question raised on the financial figures, the Committee was informed that the figures set out in Appendix 2 of the Annual Report were a snapshot in time up to the end of January 2018, and the full set of accounts would be available at the end of the financial year.  Officers explained the costs incurred to date, and that costs would be charged back to the individual schemes in getting sites ready to the point of submitting planning applications.   

Discussions were also held on viability challenges at Development Control meetings, achieving development management policy compliance, and Section 123 obligations (land disposal best value considerations), whether social costs could  be included as part of the sale of land including timeframes, and the definition of affordable housing to which responses were provided.

Aidan Dunn reiterated that SCC wanted the joint venture to work and the SCC Leader was committed to Barley Homes. 

The Chairman of the Committee summed up by stating that he had been concerned about the political pressures, the volatility of the relationship between the partners, and the learning curve which the partners had gone through.  However, he was pleased to see that SCC had learnt something from the process, and was encouraged by Aidan Dunn’s comments throughout the meeting. 

Councillor Nigel Roman moved the recommendations, these were duly seconded by Councillor John Bloodworth and with the vote being unanimous, it was:

          RESOLVED: That

1)   The Annual Report 2018 for Barley Homes (Group) Limited, attached as Appendix A to Report No: OAS/FH/18/04, and the progress made to date be noted.

2)   The Barley Homes Shareholder Advisory Group’s views and recommendations set out in Report No: OAS/FH/18/004, to address the current challenges, be noted.

3)   The Barley Homes Revised Business Plan be referred back to the Overview and Scrutiny Committee in July/September 2018, along with the full year-end set of accounts to enable the Committee to assess further progress being made.

[Councillor Ruth Bowman left the meeting at 6.45pm on the conclusion of the voting on this item]